Pakistan’s economic model is not working, a top World Bank official has said, adding that emphasizing the need for the country to alter policies that have hindered development and favored a select few.
Benefiting the Elite
According to a Policy Vision Article published in the latest UNDP publication, a top World Bank Official, Najy Benhassine has said that Pakistan has lagged behind its counterparts and the once notable advancements in poverty reduction are now regressing. Additionally, the gains from the economic growth have permanently benefitted a small elite, indicating the necessity for a shift in the economic approach.
“There is a broad consensus that action is needed to change policies that have plagued development, benefitted a few, and has led to very volatile and low growth,” a Pakistani media agency quoted Benhassine as saying.
Problems facing Pakistan
Cash-strapped Pakistan’s economy has been in a free-fall mode for the last many years bringing untold pressure on the poor masses in the form of unchecked inflation, making it impossible for a vast number of people to make ends meet.
The country is also heavily exposed to climate change with the potentially devastating impacts of climate shocks and natural disasters already apparent, he said in a Developed Advocate Pakistan, the UNDP magazine providing a platform for Pakistani authorities, civil society, and intelligentsia to exchange ideas on key development solution pathways in the country.
Reforms and Measures
Benhassine emphasized that policy failures and distortions in the critical agri-food and energy sector must be addressed In agriculture, reforms are required to unwind subsidies and price restrictions that lock smallholder farmers into a low-value farming system and encourage resource-intensive and environmentally damaging practices.
In the field of energy, the reforms should consolidate progress towards financial sustainability, improve the efficiency of distribution companies, including through increased private participation, and address the very high costs of electricity generation through increased renewable generation, the World Bank Official said.
The need for such policy shifts has been well established, but experience shows that any reform methods will face opposition The question is whether those with power and influence will take the opportunity arising from the current crisis to do what is needed. It is time for Pakistan to come together in the interests of a brighter, more prosperous, and more sustainable future, the World Bank Director said.
Fiscal Management is crucial and must be drastically improved and debt servicing costs and domestic revenue mobilization are at unsustainable levels, leaving adequate resources to invest in human development and infrastructure address economic challenges, and adapt to changing climate.
Reforms are required to consolidate and improve the quality of government spending, including cutting regressive and distortionary subsidies and reducing losses from inefficient state-owned enterprises, including in the energy sector.
More revenue must be generated from the better-off through increased progressive taxation of property and environmentally damaging activities as well as reducing tax exemptions will require stronger growth and a more dynamic and open economy.
Protection of the inward-oriented sectors, or certain distortions in taxation that favour non-tradable, all need to be reduced to encourage exports. The overall business environment needs to improve, especially for smaller firms, cutting red tape as well as opportunities for costly discretion in the government’s dealing with businesses is paramount.
Durably addressing structural macroeconomic imbalances, particularly on the fiscal side, will remain a prerequisite to ensure a more stable economic environment to attract investors, Benhassine said.
Role of the ADB
The Country Director of the Asian Development Bank in Pakistan, Yong Ye said in his vision the ADB considers consistent country policies and an uninterrupted reform momentum as necessary conditions to provide a conducive environment for addressing the complex economic challenges That limit long-term growth and achieving effective outcomes from development assistance.
Yong Ye stated that the ADB has been a key partner in the transformation of the country and is committed to continuing serving in the next phase of Pakistan’s development, with a vision to promote prosperity, inclusiveness, resilience, and sustainability under the ADB Strategy 2030 as per a Pakistan media agency.
